Pepsico’s Price Conscious Consumers
Why The Price Versus Value Debate Won’t Go Away For Any Brand Big Or Small.
I recently read a powerful quote about Pepsico (the owners of Pepsi, lays, Tropicana, Quaker, and Gatorade) about consumers buying fewer snacks (to this point it’s referring to fewer snacks being purchased from Pepsico’s brands) and the performance from their CFO.
Below is a quote from their earnings call:
“There is a cohort of consumers that have become more price conscious,” — Jamie Caulfield, CFO @ PepsiCo.
“They’re looking for more deals to get more for their money.”
“PepsiCo is offering products and package sizes that offer greater value, such as a new 10-item variety pack of snacks that is selling well”
”Shoppers are now less interested in buy-one-get-one-free promotions and want lower price points for single items”.
It is safe to say over the last couple of years consumers have become more price-conscious, we have seen it in spending across the US and the UK and will continue to see consumer spending become more value-based. FWIW Election year always sees a dip in spending.
A topic I raise with almost all of my clients is price vs value, price is part of the debate, however, what most people are looking for value.
Value is an exchange, the value exchange is - what is the feeling I get from a product or service and whether it is giving me value or an experience to connect to a value rather than a price.
If the value exchange is not there is a product or the price has been increased massively (or in recent times shrinkflation) then people will stop buying or look for actively seek out cheaper alternatives. We live in an endless world of competitors and “good enough” competitors.
(Importantly we now live in a consumer world where we don’t just have good, better, best, we have good enough, good, better, best, greatest)
The question to ask in exec meetings now should be:
Are we adding value and are we removing the price from the equation and adding constant value?
If the answer is no, a competitor will be considered or a lower price item will be tried.
In future earning calls I predict we are going to see many companies and CFOs blame:
GLP-1 drugs (Ozempic etc) and their impact on eating and drinking
The price of food and the effect of reducing the size of a product while staying at the same price (aka shrinkification)
Continued extreme weather (hottest summers in the US, wettest summers in the UK)
Poor performance marketing results (constant algorithmic shifts are impacting both organic marketing and paid media results and typically negatively)
The election results (whatever your leaning or who you voted for, elections shake things up)
and the continued blame of price-conscious consumers
If there is a takeaway here I would recommend reviewing how you price your items, how you connect your products (even if it is snacks or drinks) to experiences (I bet you remember your first Coke or your first great experience with food) and consider how you are marketing your product vs the endless competitors who will cheaper or go for discounting to win the battle on the wallet and purse.
